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$1.8 Billion: Chrysler To Retool Plant

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The Associated Press

The Tampa Tribune

Published: August 14, 2008

TRAVERSE CITY, Mich. - Chrysler LLC Vice Chairman Tom LaSorda said Wednesday his company will invest $1.8 billion to expand a Detroit assembly plant and retool it to make a new car-based sport utility vehicle.

LaSorda said the money will go for tooling and a flexible body shop at the Jefferson North Assembly Plant. That plant now makes the Jeep Grand Cherokee.

Speaking at a weeklong industry meeting organized by the Center for Automotive Research, LaSorda said the investment will add 285,000 square feet to the plant and keep more than 400 jobs in Michigan.

The new vehicle will be more fuel-efficient than the truck-based Cherokee and will be equipped with the company's new Phoenix line of fuel-efficient engines.

LaSorda said the factory should be retooled by the end of next year and will start cranking out the new vehicles early in 2010.

He said the investment will include energy-efficient lighting and the ability to use solid waste and paint sludge as an energy source.

LaSorda also said the company, majority-owned for the past year by Cerberus Capital Management LP, has identified over $1 billion in "nonearning" assets that it intends to sell to generate cash. More than half of those assets have been sold, including a truck plant in Brazil, a design center in California and several small properties near the company's headquarters in Auburn Hills.

Chrysler is the latest automaker to announce plans to retool factories to make more fuel-efficient vehicles as high gas prices squelch sales of trucks and SUVs.

The automaker's sales have fallen 23 percent through July, and the industry as a whole has experienced an 11 percent decline, including a 19 percent drop in light truck sales.

Ford Motor Co. last month announced plans to retool two U.S. plants to make small vehicles instead of trucks and SUVs, in addition to previous plans to revamp a Mexican truck plant to make the Ford Fiesta subcompact.

Toyota Motor Corp. has suspended truck and SUV production at its U.S. plants and plans to start building the Prius hybrid in the United States for the first time in 2010.

General Motors Corp. has cut shifts at some plants and has been idling truck and SUV production at others for weeks as part of its plan to reduce vehicle production.

GM also is adding shifts at plants that make the fast-selling Chevrolet Malibu and Cobalt cars.

Four GM plants that make pickups and SUVs are set to close by 2010.

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